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45-501, Ontario Prospectus and Registration Exemptions

Effective date:

December 22, 1998, except for subsequent amendments.

Published by the OSC:

May 29, 1998

Overview

This Instrument includes Ontario prospectus and registration exemptions to facilitate capital raising or business enterprises, particularly start-ups and SMEs, while protecting the interests of investors.

The Canadian Securities Administrators have implemented National Instrument 45-106 Prospectus Exemptions and National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Exemptions in order to consolidate and harmonize most of the prospectus and registration exemptions available under Canadian securities laws. However, there remain a limited number of local exemptions in each jurisdiction - including in Ontario under Rule 45-501.

Recent developments

The new exemption will allow listed reporting issuers (excluding investment funds) to raise capital from existing security holders on a more cost effective basis. The exemption will also enable existing retail security holders to acquire securities of the issuer directly, rather than through the secondary market. A similar exemption has been adopted in other Canadian jurisdictions. The exemption will come into effect on February 11, 2015. See press release.

This new family, friends and business associates prospectus exemption is expected to provide a cost-effective way for issuers (other than investment funds) to raise capital from their networks of family, close personal friends and close business associates. The exemption will come into effect on May 5, 2015. The exemption is largely harmonized with an exemption that is currently available in other Canadian jurisdictions. See press release.

The amendments provide relief from certain Ontario-specific disclosure requirements that are typically included in a "wrapper" to a foreign offering document, when foreign securities are offered on a private placement basis in Canada to permitted clients were released. Permitted clients are institutional and other sophisticated investors. The amendments come into force on September 8, 2015. See press release.

The offering memorandum exemption will now be available in all jurisdictions of Canada.

The amendments will introduce an offering memorandum prospectus exemption in Ontario and will modify the existing offering memorandum exemption in Alberta, New Brunswick, Nova Scotia, Québec and Saskatchewan to strengthen investor protection.

The following are some of the key investor protection measures included in the offering memorandum exemption:

Non-reporting issuers will be required to, among other measures, provide investors with audited annual financial statements and an annual notice describing how the proceeds raised under the offering memorandum exemption were used.

Any marketing materials will be required to be incorporated by reference in the offering memorandum so that they are subject to the same liability as the disclosure provided in the offering memorandum in the event of a misrepresentation.

Individual investors relying on the offering memorandum exemption will be subject to investment limits in most cases.

All investors will be required to sign a risk acknowledgement form.

Provided all necessary ministerial approvals are obtained, the final amendments will come into force in Ontario on January 13, 2016. See press release.

Note: The above summary of Recent Developments does not include consequential amendments made as the result of other projects.

For further details on the history of this Instrument, please refer to the OSC’s Web site.